APEC Singapore 2009: Sustaining Growth, Connecting the Region
APEC 2009 will take place amidst a challenging global economic environment. The economic slowdown which began in North America and Europe has spread to emerging developing economies. Global trade volumes are expected to fall, the first decrease since 1982.1
The key to recovery and sustained economic growth is governments' ability to create conditions for trade and investment to grow. Conversely, one of the biggest risks the world faces is that countries might restrict markets in a misguided attempt to protect jobs. Doing so will only deepen and prolong the global slowdown.
APEC economies have an important role to play at this critical juncture. To help sustain growth, APEC can provide a "stimulus package" for trade, by resisting protectionism and accelerating economic integration within the Asia-Pacific region. Singapore's chairmanship of APEC in 2009 will pursue this goal under the theme of "Sustaining Growth, Connecting the Region".
Resist Protectionism, Support Doha
APEC's top priority for 2009 is to provide impetus for the successful conclusion of the Doha Round of negotiations under the World Trade Organization (WTO). Securing a global deal will help deliver new trade flows. More importantly, it will serve as the best possible firewall against protectionist pressures by locking in current levels of access for trade and investment flows.
Accelerate Regional Economic Integration
There are three things that APEC will focus on in 2009 to accelerate regional economic integration.
Strengthen Trade and Investment Liberalisation
At-the-border
First, APEC will intensify work to reduce tariffs, non-tariff barriers and other restrictions to trade and investment flows at-the-border. In 2006, APEC Leaders identified the Free Trade Area of the Asia-Pacific (FTAAP) as a possible long-term goal. Since then, APEC has been studying various options for achieving an FTAAP. APEC economies have over 30 free trade agreements (FTAs) amongst themselves. Using that as a foundation, there are various practical steps APEC can take to put in place building blocks for a possible FTAAP. For example, APEC will discuss ways to streamline the rules of origin amongst existing FTAs to minimize the "spaghetti bowl" effect, reduce compliance costs, and increase FTA utilisation rates. APEC will also study the various options of docking, merging or enlarging some of these FTAs to possibly form a larger regional FTA over time.
Improve the Ease of Doing Business
Behind-the-border
Second, APEC will improve the ease of doing business by simplifying business regulations, as part of its larger structural reform agenda. Research suggests that the gains to APEC economies from regulatory reform could outweigh the benefits from further tariff reductions.2 The current economic crisis has made it even more important for APEC to pursue regulatory reform to make it easier, faster and cheaper for business to get trade and investment flowing.
In 2009, APEC will identify and prioritise reform efforts to address key behind-the-border barriers, with inputs from the business community. We will make use of international tools and benchmarks such as the World Bank Ease of Doing Business Survey and the APEC-OECD Integrated Checklist on Regulatory Reform to build capacity for reform and ensure tangible benefits from our reform efforts.
Enhance Physical Connectivity
Across-the-border
Third, APEC will look into improving logistics and transport networks so as to enhance physical connectivity across-the-border. This has great potential to increase trade flows. One study has shown that each day a product is delayed prior to shipment; trade is reduced by 1 per cent.3 A one-day reduction in time taken to move cargo from a US warehouse to the port will increase total trade for the US by $29 billion a year.4
APEC is already ahead of the rest of the world in its work on trade facilitation, which aims to streamline customs and other administrative procedures involved in moving goods across borders. We will build on this work to develop a comprehensive framework of initiatives that could further reduce the time, cost and the uncertainty involved in moving goods along the entire supply chain.
Strengthen APEC
In 2009, APEC will continue to strive to be the premier forum for economic integration and cooperation within the Asia-Pacific region, as well as an effective platform for business sector engagement.
We will continue our efforts to strengthen and professionalise the APEC Secretariat so that it is best equipped to implement the work set out by APEC Leaders, Ministers and Senior Officials. Most notably, in 2009, APEC will bring to fruition its plan to appoint a fixed-term professional Executive Director to provide continuity in leadership at the Secretariat.
APEC will also continue to find ways to streamline its activities and explore innovative meeting formats to foster more informal interaction and meaningful exchange among member economies.
APEC will seek to forge closer partnerships with the business community by, for instance, creating more synergies between the APEC Business Advisory Council (ABAC) and the Senior Officials' Meeting (SOM) process.
1 The World Bank (Dec 2008), "Global Economic Prospects 2009: Commodities at the Crossroads." Available at www.worldbank.org
2 Dee, P (2007), "East Asian Economic Integration and its Impact on Future Growth", The World Economy, Volume 30, Issue 3, pp.405-423.
3 Djankov, Simeon, Freund Caroline and Cong S. Pham (updated August 2007), "Trading on Time", World Bank Working Paper, p.21.
4 Creskoff, S (2008), "Trade Facilitation: An Often Overlooked Engine of Trade Expansion," Global Trade and Customs Journal 3, No.1.